Crime & Courts

EXCLUSIVE: Feds accuse big Midlands doctors group of fraud

Government accuses Family Medicine Centers of South Carolina of tacking on extra unnecessary charges to patients’ bills
Government accuses Family Medicine Centers of South Carolina of tacking on extra unnecessary charges to patients’ bills

The U.S. Justice Department has filed a civil fraud suit against a major Midlands family doctors group practice, alleging that for years the practice illegally ramped up bills by adding unnecessary charges when patients came in for visits.

Many of the alleged extra charges involved blood and liver tests to older patients on Medicare, the lawsuit said.

Medicare, a federal elderly health care program, paid “over $9 million” in improper payments to Family Medicine Centers of South Carolina, “many of which were medically unnecessary,” according to a government lawsuit against the practice.

Family Medicine Centers is one of South Carolina’s largest largest primary care providers. It has six offices around the Columbia area, and its 18 physicians care for some 30,000 patients.

In bringing suit, the government joined an initial civil action against Family Medicine Centers that was brought by a physician who once worked there.

In 2013, the practice fired that doctor, Catherine Schaefer, who then brought her allegations about the practice’s billing procedures to the attention of federal fraud attorneys in the U.S. Attorney’s office in Columbia.

Before joining her lawsuit, federal attorneys in Columbia, working with counterparts in Washington, spent months investigating her allegations to see how much, if any, fraud might be involved, U.S. Attorney Bill Nettles said Thursday.

In a prepared statement released Thursday, Family Medicine Centers Medical Director Dr. Stephen Serbin said, “This civil lawsuit was brought by a disgruntled former employee who was terminated after spending less than nine months at FMSC.

“Our practice firmly denies all of the allegations in this lawsuit, and will vigorously defend it,” Serbin said. “FMSC has always placed the interests of our patients above any self-interest, and maintains its commitment to the families of South Carolina.”

The practice’s motto is “Let Our Family Take Care of Your Family,” and its philosophy can be summed up as “We pledge to be compassionate, comprehensive, committed, competent, and cost-effective,” according to its website.

But federal fraud attorneys allege Family Medicine Centers doctors “routinely” broke their pledge to be cost-effective by ordering “extensive and expensive laboratory tests for ... the physicians’ personal financial gain, and not because such tests were necessary.”

The case was brought under the federal false claims act, which provides for triple damages and awards to be paid out by any party found guilty for submitting fraudulent claims to the government. That means, if the government can prove it was defrauded by $9 million, a jury or judge could theoretically award damages up to $27 million.

In Schaefer’s lawsuit, which is a companion case to the government’s lawsuit, she describes herself as a 1994 University of South Carolina medical school graduate who had a family medical practice in Columbia with 3,000 patients before joining with Family Medicine Centers in 2013.

In her solo practice, her lawsuit said, she worked extensively with Medicare patients, as well as those with Tricare, a federal health care program that covers active duty and retired military members and their familes, and was familiar with the federal laws concerning filing for reimbursements.

In April 2013, Schaefer closed her practice and went to work with Family Medicine Centers at its Northeast Columbia location, “bringing with her the 3,000-patient practice she built over the previous 10 years,” according to legal papers in the case.

Once at Family Medicine Centers, “a number of Dr. Schaefer’s patients began complaining about inaccurate billing” such as being billed for a nursing visit as well as getting a B-12 vitamin shot, whereas previously they had only been billed for a B-12 shot, her lawsuit said.

As time went by, and Schaefer repeatedly tried to correct her new group’s billing system, she discovered “a concerted effort by defendants to fraudulently increase healthcare services billed to patients and their insurers, including federal programs, in excess of fees actually earned or justified as medically necessary,” according to her lawsuit.

The alleged improper jacking up of fees included a whole range of medical services, including the double billing of patients, upcoding preventative office visits as more costly “problem-related office visits,” urging patients to undergo extensive lab testing without determining if that testing was necessary and requiring doctors to order more expensive lab tests for patients than were actually warranted, according to Schaefer’s lawsuit.

During her seven months with Family Medicine Centers, Schaefer was warned numerous times “for refusing to adopt” her new practice’s billing system, her lawsuit said. Finally, after repeatedly refusing to “create physician notes capable of justifying fraudulent charges,” she was fired, her lawsuit said.

In his statement, Family Medicine Centers’ Serbin said his group “looks forward to a time when we can address the allegations in this case publicly, but due to the litigation process, we cannot do so now.”

In the 37 years it has been in existence, the group has “been dedicated to improving the health of thousands of South Carolina families,” Serbin said. “We are confident that we will continue in our leadership role within the healthcare community.”

Nettles said the federal government’s system for reimbursing doctors depends on doctors billing honestly.

“The cornerstone of Medicare is that the government believes it can trust the doctor to not steal,” Nettles said. “We will continue to aggressively bring suit in cases of fraud against the government.”

Schaefer is represented by Columbia attorney Bert Louthian, who said, “We are all just looking forward to getting this case to trial and getting the facts in front of a jury.” Attorneys Dick Harpootlian and Chris Kenney are co-counsel.

Family Medicine Centers is represented by Columbia attorney Mark Moore, a former assistant U.S. attorney, who gave The State newspaper Serbin’s statement.

Family Medicine Centers

The doctors practice is one of South Carolina’s largest primary care providers.

6

Offices around the Columbia area

18

Staff physicians

30,000

Current patients

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